Ag Insight

The U.S. Department of Agriculture recently confirmed the first shipment of U.S. beef had arrived in South Africa following the reopening of that market earlier this year.

Early in January, after more than two years of intense discussions, the United States and the Republic of South Africa concluded an agreement on sanitary barriers and related health certificates for U.S. beef, pork and poultry products exported to South Africa. The South African market had previously been closed to U.S. poultry since 2000, beef since 2003 and pork since 2013. With the removal of the barriers, U.S. exports of meat to South Africa could reach $75 million annually.

The United States began shipping poultry to South Africa earlier this year under the terms of the agreement. As a result, U.S. poultry exports to South Africa totaled almost 12,000 metric tons, worth $7.2 million, in the first quarter of 2016.

China’s status as leading soybean importer likely to continue

China is the world’s largest importer of soybeans and experts predict that’s not likely to change.

The country’s dominance as an importer reflects government policies favoring imports of soybeans over feed grains, coupled with dietary shifts toward more animal proteins that create a strong demand for soybean meal used for livestock feed rations.

In 1995, China adopted a policy of 95 percent self-sufficiency for grains; and, from 2008 to 2012, the country increased price supports for wheat, rice and corn at higher rates than those for soybeans. That action made soybean production less attractive to farmers and resulted in an 18 percent decline in domestic production while soybean imports jumped 50 percent.

China’s border policies also favor soybean imports. Import tariffs for soybeans are lower than those for soybean meal or oil, resulting in that nation’s oilseed-crushing industry becoming the largest in the world, supplied mainly with imported soybeans.

With China’s policies continuing to favor grain production over soybeans and its feed and livestock industries expected to continue growing, the country’s demand for imported soybeans is projected to remain strong over the next decade, increasing from 83 million tons in 2016/17 to 109.5 million tons in 2025/26.

Rural counties less synonymous with farming

Where farming was once almost synonymous with rural, non-metropolitan areas, the predominance of farming as an industry in rural areas of the United States is now largely confined to the Plains States, and only 6 percent of the rural population in 2015 lived in the 391 rural farming-dependent counties nationwide.

This finding comes from the USDA’s Economic Research Service whose typology codes are a classification system providing a tool to analyze and characterize the economic dependence of U.S. counties.

In contrast, although also declining in number, manufacturing predominated in the economies of a similar number of rural counties (351) concentrated mainly east of the Mississippi, but also including a scattering of counties farther west. These counties account for about 22 percent of the rural population.

The 183 rural mining dependent counties accounted for 7 percent of rural population in 2015, and were the only economic type among rural counties to see strong population growth (1.6 percent) in 2010-15.

Weed control practices change with increase in glyphosate resistance

For weed control, U.S. corn and soybean farmers rely on chemical herbicides, applied to an overwhelming majority of corn and soybean acres. But the types of herbicides used have changed as the number of glyphosate-resistant weeds has increased.

Over the last two decades, the greater use of glyphosate (the active ingredient in herbicide products such as Roundup) and decreased use of herbicide products containing other active ingredients has contributed to the development of over 14 glyphosate-resistant weed species in U.S. crop production areas.

Glyphosate resistance management practices include herbicide rotation, tillage, scouting for weeds and other forms of weed control. In some cases, USDA experts have found usage rates for RMPs have increased. In other cases, RMP use dropped; but then has been on the rise in more recent years as information about glyphosate-resistant weeds spread.

Global stocks of cotton anticipated to decline

Global ending stocks of cotton are forecast to decline in the 2015/16 marketing year (August-July), down about 9 percent from last year’s record of nearly 112 million bales.

Cotton stocks rose dramatically between 2010/11 and 2014/15 as relatively high prices encouraged world production and discouraged consumption. Despite this season’s anticipated decrease, ending stocks remain double those of 2010/11.

The recent global stocks buildup resulted from policies in China insulating Chinese cotton producers from declining world prices and, at the same time, encouraged imports. More recent policy shifts in China have discouraged production and imports in that country, beginning the process of reducing the surplus of government-held stocks.

In 2015/16, China’s stocks are anticipated to decrease for the first time since 2010/11. However, with stock reductions also anticipated in the rest of the world, China’s share of global stocks remains above 60 percent.

USDA offering portable storage, handling equipment loans

USDA now is providing a new financing option to help farmers purchase portable storage and handling equipment. The loans that include a smaller microloan option with lower down payments are designed to help producers, including new, small and mid-sized producers, grow their businesses and markets.

The program’s new microloan option allows applicants seeking less than $50,000 to qualify for a reduced down payment of 5 percent and no requirement to provide three years of production history. Farms and ranches of all sizes are eligible.

The microloan option is expected to be of particular benefit to smaller farms and ranches and specialty crop producers who may not have access to commercial storage or on-farm storage after harvest. These producers can invest in equipment such as conveyers, scales or refrigeration units and trucks that can store commodities before delivering them to markets.

Producers do not need to demonstrate the lack of commercial credit availability to apply.

Land planted to soybeans in Argentina grew from less than 5 million hectares (1 hectare = 2.47 acres) in 1992/93 (April-March) to 20 million hectares in 2015/16, while wheat and corn areas have seen little or no growth during this period.

Soybean meal is a major component of livestock feed, and the growing demand for meat and livestock products worldwide has supported increased soybean production and trade.

In Argentina, tax policies have played a role in soybean production as well. In 2002, the country imposed taxes on its agricultural exports as a way to generate government revenue. Argentina applies lower export taxes on soybean meal and oil than it does on raw soybeans, stimulating the construction of large oilseed crushing facilities and, consequently, leading to more soybean meal and oil exports.

In 2008, the Argentinian government increased export taxes and imposed a permitting system that further restricted exports of products such as corn, wheat and beef. Soybean products face less obstacles in export markets and abundant opportunities to expand planted area through double cropping and adjusting crop-pasture rotations on marginal lands in the northwest part of Argentina.

As a result, Argentina’s soybean area has expanded rapidly and is projected to reach over 22 million hectares by 2025/26.